Expectations from the upcoming Union Budget 2018-19

Dhiraj Jain, Director, Mahagun Group

The Union Budget 2018-19 holds immense significance as it will be the first budget to be presented after the implementation of GST and RERA. Being one of the core sectors of the economy, real estate sector is still awaiting to be granted an industry status. It has been a long pending wish of the developers that will help in gaining access to finance at a much lowered cost, thereby making the sector more affordable. Also, increasing the savings cap from 1.5 lakhs to 3 lakhs will greatly help the people to invest more and save on tax, which basically increases the purchasing power. Lowered personal income tax will allow buyers to allocate money and increase their portfolio where real estate can be a superior option.

Abhishek Bansal, Executive Director, Pacific Group

Policies affecting the allied industries to the real estate sector such as cement and steel should be looked into, because any price variation there, affects the prices of real estate sector accordingly. Tax deduction limit for housing loans of Rs. 2 lakh is still very less if we look at the average ticket price of all major tier 1 cities. Increasing this value will greatly reduce the tax burden and promote people to invest in real estate. First REIT is yet to be listed. Simplifying the tax reforms for REITs must be thought about as well, considering its long term benefit for the sector and country.

Manoj Gaur, Vice President CREDAI-National & MD, Gaurs Group

GST’s inclusion in the country has allowed the developers to pass on the benefits of the input tax credit to the buyers. Bringing stamp duty and registration charges in the ambit of GST will be highly appreciated if the Budget addresses it. Section 80EE provides a deduction of Rs. 50,000 for the first time home buyers if the property is not above Rs. 50 lakhs, irrespective of the size or location. We expect this year’s Budget to increase this tax limit to Rs. 2 Lakhs or increase the limit of property value to Rs. 1 crore so that savings on taxation gets increased and real estate sector becomes an important investment option for buyers.

Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz

Indian real estate market has been the backbone of our economy for decades now and the accordance of Industry status is the need of the hour. With rapid infrastructural development, capital appreciation is taking place at fast pace. Thus, government must either try and provide subsidy when offering new land parcels or, granting the Industry status to the real estate sector will help the developers gain funds at a much reduced cost. In both cases, the net cost to the buyer will be lesser. A net effective GST rate of 12 percent on under-construction properties, after an abatement of 33 percent, is still on the higher side and can be looked into so that the cost on the buyer gets minimised.

Gaurav Gupta, General Secretary CREDAI-Ghaziabad & Director, SG Estates

Real estate sector has modernised today with the concepts of green building taking over. Budget 2018-19 must address about providing special incentives to the developers and projects which are offering eco-friendly concepts. This will greatly promote green building concept amongst the developer fraternity and help environment as well. Also, Single window system in real estate sector should be executed across the nation so that timely execution and delivery of projects take place. This budget must also aim at doubling the present savings limit so that the young population of the country gets a higher spending power and look at real estate sector as an investment avenue.

Akshay Taneja, MD, TDI Infratech Ltd.

This Union Budget the government must ensure provisions for the upbringing of tier 2 and 3 cities along with decisions for infrastructural development and strategic connectivity between them. With the saturation of tier 1 regions due to the lack of land space and high prices, tier 2 and 3 cities must be next in line for urbanisation. Apart from this, any relief towards the personal income tax or increase in savings cap will bring about a cheer and improve the market sentiments that can be fruitful for the realty sector in near future.

Pradeep Aggarwal, Co – founder & Chairman, Signature Global

The government’s push for affordable housing has been very well visible in the last few Union Budgets wherein they have laid out various direct and indirect sops for this sector. There are still certain points which need consideration such as the GST component on affordable housing should be reduced along with denoting special affordable housing zones in the country where all facilities and amenities are made available. These zones can see multiple developers working in tandem with land being provided at subsidised rates and special institutional funds need to be allocated for affordable housing projects so that developers can have access to these in the form of soft loans or loans are marginalised interest rates.

Khushru Jijina, Managing Director, Piramal Finance & Piramal Housing Finance

"2017 was a turbulent year for the Indian real estate sector and one marked by change in the form of the aftermath of demonetization, the promulgation of the Real Estate Regulatory Act (RERA) and the introduction of the GST regime. Our wishlist from Budget 2018 would be the inclusion of the RE sector in its entirety under the ambit of GST. The rate of tax on specified affordable housing schemes has been notified as 8% which is still quite high and could be reduced to 5% instead to provide the necessary boost towards truly achieving ‘Housing for All’, a priority initiative for the Government. Incentives for first time home buyers under 80EE was restricted to properties valued at INR 50 lakhs or less. The reality of prices exceeding this amount in most metro cities suggests that the limit can be inreased such that benefit to first time home buyers are achieved in both letter and spirit. 2017 also restricted the loss from house property to INR 2 lakhs (which was unlimited earlier) which has severely curtailed the demand and investment rationale for second home properties as income yielding assets."

Ashwini Hooda , Deputy Managing Director, Indiabulls Housing Finance Limited

“The expectations from the Union Budget are substantial, as is every year. For affordable housing, there is a notable point for the Government to consider. As things stand, despite its far reaching scope, the PMAY subsidy is unable to reach a large portion of home buyers who are migrating to the peripheral areas of metros and other big cities in search of jobs. This is largely due to their ownership of pukka houses, in many cases ancestral homes, in their smaller home towns. The affordability of this home buyer thus reduces considerably, as he/she must be a first time home buyer to be eligible for the PMAY. Almost 50-60% of the housing demand goes untapped by the subsidy due to this. It would be interesting to see if the Government would address this subject and expand the reach of the subsidy, thereby accelerating its mission of Housing for All.”

Rajiv Bhalla, Managing Director at Barco Electronic Systems

“With the Smart Cities Mission being a priority for the government, we can expect increased capital allocation towards projects in this direction in the budget announcement with a vision to develop the essential smart infrastructure. As India makes its way towards becoming a digital-first economy, we can also look forward to a sustained push aimed at enabling more businesses to make a seamless digital transition.

It would also be interesting to see what financial, infrastructural, and regulatory provisions are made for the ‘Make in India’ initiative. For India to become a global manufacturing hub, the government will have to ramp up its efforts to provide essential support for the ‘In Country, For Country’ companies. Creating an environment where businesses can thrive will encourage more players – both indigenous and international – to explore the possibility of manufacturing within India. The increased economic activity that this facilitates will, in turn, give both the GDP and employment generation a massive boost.”

Sachin Bhandari, CEO, VTP Realty

“One of the prominent agenda of the government has been to promote Housing for All and the previous budget had introduced certain measures to boost up the Indian real estate sector. One of the key steps initiated by the government has been implementation of Real Estate Regulatory Authority (RERA) which safeguards the interest of the home buyers. In order to promote affordable housing and to enhance the investment in the segment, the government can introduce a 10% tax on holding on to inventory after the completion of the project and occupation certificate has been obtained. In the year 2017, we expected RERA to bring transparency and GST to bring ease to the sector, but both these expectations were not met properly. In the coming budget, the applicable GST on the real estate should come down and include reforms which will benefit the developers and the buyers.

In order to provide incentives to the first time home buyers, the government should extend the benefits to loan buyers who have sanctioned the home loan after 31st March 2017. We are also looking for provisions to channel the insurance and pension funds for financing infrastructure projects.

On the tax front, Sec 80IA and Sec 10 may get amended. These amendments can help in improving the cash flows of the infrastructure companies. The budget should focus on cutting down long term capital gains holding period for Real Estate Investment Trusts (REITs) from the existing three years to one year. This will help in bringing the investment opportunity at par with equity investments which in turn will make REITs more acceptable to the investors.”

Vinay Sethi, Head, Market Development, Thomson Reuters, South Asia

India’s taxation environment was largely viewed as unfriendly and complex due to a high corporate tax rate coupled with exemptions, which pushed the effective tax rate far from the statutory tax rate and accounted for a large number of disputes. While presenting the Union Budget 2015-16, a phased reduction of corporate tax rates from 30% to 25% with a corresponding phased withdrawal of exemptions was announced by the Finance Minister. The benefit of a reduced corporate tax rate of 25% was extended to corporations within a stipulated turnover threshold.

The Union Budget 2018-19 should continue the strategy of making India’s taxation system strong and transparent by slashing the basic corporate tax rate to 25% for all categories of corporates. Such reduction accompanied with fewer tax exemptions will undoubtedly make both, the tax law and tax administration simpler. At the same time, it will bring use of technology, analytics and data mining to the forefront.

Government’s focus has been to broaden tax base, increase tax certainty, reduce compliance costs and use data analytics. The corporations will need to respond by investing in the right tax technology solutions to meet and make the most of government initiatives and also use tax automation and data analytics to add much higher value to their businesses.

Dhiraj Jain, Director, Mahagun Group

The Union Budget 2018-19 holds immense significance as it will be the first budget to be presented after the implementation of GST and RERA. Being one of the core sectors of the economy, real estate sector is still awaiting to be granted an industry status. It has been a long pending wish of the developers that will help in gaining access to finance at a much lowered cost, thereby making the sector more affordable. Also, increasing the savings cap from 1.5 lakhs to 3 lakhs will greatly help the people to invest more and save on tax, which basically increases the purchasing power. Lowered personal income tax will allow buyers to allocate money and increase their portfolio where real estate can be a superior option.

Abhishek Bansal, Executive Director, Pacific Group

Policies affecting the allied industries to the real estate sector such as cement and steel should be looked into, because any price variation there, affects the prices of real estate sector accordingly. Tax deduction limit for housing loans of Rs. 2 lakh is still very less if we look at the average ticket price of all major tier 1 cities. Increasing this value will greatly reduce the tax burden and promote people to invest in real estate. First REIT is yet to be listed. Simplifying the tax reforms for REITs must be thought about as well, considering its long term benefit for the sector and country.

Manoj Gaur, Vice President CREDAI-National & MD, Gaurs Group

GST’s inclusion in the country has allowed the developers to pass on the benefits of the input tax credit to the buyers. Bringing stamp duty and registration charges in the ambit of GST will be highly appreciated if the Budget addresses it. Section 80EE provides a deduction of Rs. 50,000 for the first time home buyers if the property is not above Rs. 50 lakhs, irrespective of the size or location. We expect this year’s Budget to increase this tax limit to Rs. 2 Lakhs or increase the limit of property value to Rs. 1 crore so that savings on taxation gets increased and real estate sector becomes an important investment option for buyers.

Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz

Indian real estate market has been the backbone of our economy for decades now and the accordance of Industry status is the need of the hour. With rapid infrastructural development, capital appreciation is taking place at fast pace. Thus, government must either try and provide subsidy when offering new land parcels or, granting the Industry status to the real estate sector will help the developers gain funds at a much reduced cost. In both cases, the net cost to the buyer will be lesser. A net effective GST rate of 12 percent on under-construction properties, after an abatement of 33 percent, is still on the higher side and can be looked into so that the cost on the buyer gets minimised.

Gaurav Gupta, General Secretary CREDAI-Ghaziabad & Director, SG Estates

Real estate sector has modernised today with the concepts of green building taking over. Budget 2018-19 must address about providing special incentives to the developers and projects which are offering eco-friendly concepts. This will greatly promote green building concept amongst the developer fraternity and help environment as well. Also, Single window system in real estate sector should be executed across the nation so that timely execution and delivery of projects take place. This budget must also aim at doubling the present savings limit so that the young population of the country gets a higher spending power and look at real estate sector as an investment avenue.

Akshay Taneja, MD, TDI Infratech Ltd.

This Union Budget the government must ensure provisions for the upbringing of tier 2 and 3 cities along with decisions for infrastructural development and strategic connectivity between them. With the saturation of tier 1 regions due to the lack of land space and high prices, tier 2 and 3 cities must be next in line for urbanisation. Apart from this, any relief towards the personal income tax or increase in savings cap will bring about a cheer and improve the market sentiments that can be fruitful for the realty sector in near future.

Pradeep Aggarwal, Co – founder & Chairman, Signature Global

The government’s push for affordable housing has been very well visible in the last few Union Budgets wherein they have laid out various direct and indirect sops for this sector. There are still certain points which need consideration such as the GST component on affordable housing should be reduced along with denoting special affordable housing zones in the country where all facilities and amenities are made available. These zones can see multiple developers working in tandem with land being provided at subsidised rates and special institutional funds need to be allocated for affordable housing projects so that developers can have access to these in the form of soft loans or loans are marginalised interest rates.

Suresh KV, Country Head, ZF India

“The Indian Automotive industry is no doubt one of the prominent growth drivers of our economy and contributes about 7% to the country’s GDP. Auto industry grew 11.27% in FY17 and the manufacturing sector grew 7.7% in FY17. India is world’s 5th largest automotive market with exciting business opportunities. Abolishment of Foreign Investment Promotion Board and policy initiatives like ‘Make in India’ has given an encouragement to global players like us. Automotive makers are expanding their manufacturing base in India and focusing more on localization. The implementation of GST has significantly improved the effectiveness of transportation resulting in an improved business scenario

Considering the government’s push for electric vehicles we are hoping that there will be substantial allocations of funds for the development of infrastructure that we need for EV. There should be a tax-friendly framework and subsidiaries should be given to EV manufacturers for smooth adoption of electric vehicles in India. The other area where the government has significantly brought in improvements is Safety. The focus on safety will enable India to cut the accident rates and help the automotive industry and ZF to achieve the vision the Vision Zero goal of zero accidents. As the government is also set to launch Make in India 2.0, which will focus on futuristic sectors like robotics, genomics, chemical feedstock and electrical storage the upcoming union budget should also address the capital needs and tax framework for implementation of the same. Overall, the industry is also anticipating cuts in the corporate tax rate and revision in the tax deductions.”